DoD awards $49M logistics consulting contract to General Atomics Aeronautical Systems, Inc

Contract Overview

Contract Amount: $49,082,420 ($49.1M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-07-26

End Date: 2027-07-31

Contract Duration: 1,831 days

Daily Burn Rate: $26.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: SPAIN CLS FOLLOW-ON

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $49.1 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: SPAIN CLS FOLLOW-ON Key points: 1. Contract awarded for logistics consulting services, indicating a need for specialized expertise in supply chain and distribution. 2. The contract's duration of over 5 years suggests a long-term requirement for these services. 3. Awarded as a definitive contract, implying a clear scope and established terms. 4. The 'Not Available for Competition' status warrants further investigation into the justification for sole-sourcing. 5. The cost-plus-fixed-fee pricing structure may incentivize cost control by the contractor. 6. The contract is managed by the Department of the Air Force, suggesting a focus on aerospace and defense logistics.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific deliverables or performance metrics. The cost-plus-fixed-fee structure can sometimes lead to higher costs if not carefully managed. Comparing it to similar logistics consulting contracts would require detailed analysis of scope and duration, which are not fully specified here. The lack of competition also raises questions about whether the government secured the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. The justification for this approach, often cited as 'Not Available for Competition,' needs to be thoroughly reviewed to understand why other qualified contractors were not considered. Sole-source awards can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from competitive pricing, potentially leading to a higher overall expenditure for the services rendered.

Public Impact

The Department of the Air Force is the primary beneficiary, receiving specialized logistics consulting. Services are expected to improve process, physical distribution, and logistics operations. The contract is managed from California, indicating a potential geographic focus for some operations or oversight. The contract may indirectly impact the aerospace and defense logistics workforce through potential subcontracting or knowledge transfer.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced innovation.
The sole-source nature of the award requires scrutiny to ensure it was truly necessary and justified.
Cost-plus-fixed-fee contracts can sometimes lead to cost overruns if not managed diligently.

Positive Signals

General Atomics Aeronautical Systems, Inc. is a known entity in the defense sector, suggesting potential expertise.
A definitive contract with a defined end date provides a clear framework for service delivery.
The long duration indicates a sustained need and potential for building a strong working relationship.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on logistics consulting. The market for defense logistics consulting is substantial, driven by the complex supply chains and operational demands of military branches. Comparable spending benchmarks would typically involve analyzing other contracts for similar consulting services within the Department of Defense or other federal agencies, considering factors like contract type, duration, and scope of work.

Small Business Impact

There is no indication that this contract includes a small business set-aside. Given the sole-source nature and the prime contractor, it is unlikely that significant subcontracting opportunities for small businesses are mandated, though the prime contractor may engage them voluntarily. This could limit the direct impact on the small business ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract will likely be managed by the contracting officer and program management officials within the Department of the Air Force. Accountability measures are typically defined within the contract's terms and conditions, including performance standards and reporting requirements. Transparency may be limited due to the sole-source nature, but contract award details are publicly available.

Related Government Programs

Defense Logistics Agency (DLA) contracts
Air Force Materiel Command (AFMC) support contracts
Supply Chain Management Consulting Services
Aerospace Logistics Support

Risk Flags

Sole-source award justification requires review.
Cost-plus-fixed-fee structure necessitates strong government oversight.
Contractor's specific expertise in logistics consulting needs verification.
Potential for limited price discovery due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.1 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. SPAIN CLS FOLLOW-ON

Who is the contractor on this award?

The obligated recipient is GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $49.1 million.

What is the period of performance?

Start: 2022-07-26. End: 2027-07-31.

What specific logistics challenges is the Air Force aiming to address with this contract?

The contract's description as 'Process, Physical Distribution, and Logistics Consulting Services' suggests the Air Force is seeking expertise to optimize its supply chain operations, improve the efficiency of physical distribution networks, and enhance overall logistics management. This could encompass areas such as inventory management, transportation routing, warehousing, and the integration of new technologies or methodologies to streamline these processes. The long duration implies a strategic initiative rather than a short-term fix, potentially related to modernization efforts, cost reduction goals, or adapting to evolving operational requirements in the defense sector.

What is the justification for awarding this contract on a sole-source basis?

The justification for awarding this contract on a sole-source basis ('Not Available for Competition') is critical for understanding the value proposition for taxpayers. Typically, sole-source awards are made when only one responsible source is available or when a compelling urgency exists that precludes competition. Without access to the specific justification document (e.g., a Justification and Approval or J&A), it is impossible to definitively state the reasons. However, common justifications in the defense sector include unique capabilities, proprietary technology, or a critical need for continuity of services from a highly specialized incumbent. A thorough review of the official justification is necessary to assess if competition was indeed not feasible or in the government's best interest.

How does the cost-plus-fixed-fee (CPFF) pricing structure impact cost control and potential for overruns?

The Cost-Plus-Fixed-Fee (CPFF) pricing structure means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to complete the work efficiently to maximize their profit margin, as the fee does not increase with costs. However, it also places a significant burden on the government to meticulously monitor and audit the contractor's costs to ensure they are reasonable, allocable, and allowable. If the government's oversight is insufficient, or if the initial cost estimates are inaccurate, there is a risk of cost overruns, as the government is obligated to cover all approved costs. The fixed fee itself is negotiated upfront and should reflect the complexity and risk associated with the effort.

What is General Atomics Aeronautical Systems, Inc.'s track record with similar government contracts?

General Atomics Aeronautical Systems, Inc. (GA-ASI) is primarily known for its work in unmanned aerial systems (UAS) and related defense technologies. While they have a strong track record in aerospace engineering and defense manufacturing, their experience specifically in providing broad logistics consulting services, as indicated by this contract's NAICS code (541614), may be less prominent compared to their core competencies. Analyzing their past performance on contracts involving process, physical distribution, and logistics consulting would be essential. This would involve reviewing past performance evaluations, any contract disputes or terminations, and the successful delivery of similar services to government agencies. Their established presence in the defense sector suggests they possess relevant organizational capabilities, but the specific nature of consulting services warrants detailed examination.

Are there comparable logistics consulting contracts awarded by the Air Force or DoD that can serve as a benchmark?

To establish a benchmark, one would need to identify other definitive contracts awarded by the Department of the Air Force or the broader Department of Defense for 'Process, Physical Distribution, and Logistics Consulting Services' (NAICS 541614) within a similar timeframe. Key comparison points would include the contract's total value, duration, pricing structure (e.g., CPFF, FFP), specific deliverables, and the level of competition. For instance, if similar contracts were awarded through full and open competition at a significantly lower total cost or for a more extensive scope of services, it would suggest that this $49 million award might be less cost-effective. Conversely, if other sole-source awards for specialized logistics support have similar price points, it could provide context. Access to contract databases and performance reports is crucial for such comparative analysis.

What are the potential risks associated with a 5-year logistics consulting contract awarded on a sole-source basis?

The primary risks associated with a 5-year logistics consulting contract awarded on a sole-source basis include: 1. **Cost Risk:** Without competition, there's a reduced incentive for the contractor to offer the lowest possible price, potentially leading to higher costs for the government. The CPFF structure further necessitates robust government oversight to manage costs. 2. **Performance Risk:** While GA-ASI is a reputable company, the specific expertise in logistics consulting might not be their core strength, potentially impacting the quality or effectiveness of the services delivered. 3. **Stagnation Risk:** A long-term sole-source contract can reduce the impetus for the contractor to innovate or adapt services as market conditions or technological advancements evolve, as there is no competitive pressure to do so. 4. **Lack of Transparency:** Sole-source awards inherently offer less transparency regarding the selection process and pricing negotiations compared to competed contracts.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Process, Physical Distribution, and Logistics Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA868922R2019

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 14200 KIRKHAM WAY, POWAY, CA, 92064

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $53,263,522

Exercised Options: $53,263,522

Current Obligation: $49,082,420

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $941,402

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline